Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Splunk ( SPLK) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Splunk as such a stock due to the following factors:

SPLK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.0 million.

SPLK has traded 1.9 million shares today.

SPLK traded in a range 240.1% of the normal price range with a price range of $4.90.

SPLK traded below its daily resistance level (quality: 31 days, meaning that the stock is crossing a resistance level set by the last 31 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

Splunk, Inc. provides software solutions that provide real-time operational intelligence. Currently there are 11 analysts that rate Splunk a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Splunk has been 1.1 million shares per day over the past 30 days. Splunk has a market cap of $6.4 billion and is part of the technology sector and computer software & services industry. Shares are up 108% year to date as of the close of trading on Friday.

TheStreet Quant Ratings rates Splunk as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share.

Highlights from the ratings report include:

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 199.3% when compared to the same quarter one year ago, falling from -$4.58 million to -$13.69 million.

SPLUNK INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SPLUNK INC reported poor results of -$0.39 versus -$0.01 in the prior year. This year, the market expects an improvement in earnings (-$0.01 versus -$0.39).

The gross profit margin for SPLUNK INC is currently very high, coming in at 91.08%. Regardless of SPLK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SPLK's net profit margin of -20.47% significantly underperformed when compared to the industry average.

Compared to other companies in the Software industry and the overall market, SPLUNK INC's return on equity significantly trails that of both the industry average and the S&P 500.

SPLK has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.92, which clearly demonstrates the ability to cover short-term cash needs.